(YELLOWKNIFE) Wednesday, October 21, 2020 – Kevin O’Reilly, MLA for Frame Lake, is questioning the review of the fiscal regime of mining released on October 20th by the Minister of Industry, Tourism and Investment. The study is a theoretical review of the royalties and taxation for two model mines (diamond and base metal) under 21 different jurisdictions.
The $300,000 Pricewaterhouse Coopers “Tax and royalty benchmark: mining in the Northwest Territories” study was contracted during the 18th Assembly as the basis for the GNWT’s efforts to review the fiscal regime for mining. Regular MLAs were not consulted on the design of this study or the overall process of reviewing public revenues from mining. This is the first initiative by the GNWT to exercise its authority over resource revenues since devolution on April 1, 2014.
The study concludes that the NWT remains “competitive” in comparison to these other jurisdictions and that the best way to increase revenues is to reduce the costs for the mining industry through public investment in infrastructure. A new fiscal relationship with the federal government where GNWT gets to keep more of its resource revenues was not considered.
“There are a variety of problems and issues with the way this study was designed and sets the framework for Cabinet’s review of whether our citizens are getting fair value for the extraction of this one-time natural capital. We need analysis of the real and actual revenues from mining to our government to ensure we achieve a fair balance between competitiveness and fair return. Until the veil of secrecy is lifted on public reporting of royalties and taxation of the extractive sector, it will be impossible to have that public debate,” said MLA O’Reilly.
The study does not consider the numerous other issues related to competitiveness including political stability and regulatory certainty. There was no attempt to compare the relative effectiveness of revenue capture across a variety of regimes or approaches. Analysis and comparison of revenue leakage were also not considered.
“While I support having this theoretical review of some aspects of competitiveness, it should not serve as the foundation for our review of the fiscal regime for mining. It is an important piece but should not limit in any way the important work that remains to ensure we get fair value. Cabinet also needs to ensure that there is an independent, comprehensive and collaborative review using appropriate expertise as recommended in the last Assembly. Leaving this review under a department charged with promoting mining is not the way to ensure a thorough and balanced review,” commented MLA O’Reilly.